TORONTO - Dwindling pension benefits are forcing many Canadians to rethink how they’ll spend their golden years, but that doesn’t necessarily mean giving up their dreams of a sun-soaked retirement.

Some experts say that with proper planning, uprooting to an exotic locale can actually help cash-strapped seniors stretch their retirement dollars.

Aside from milder temperatures, they say many of the destinations favoured by Canadians — including parts of Mexico, Panama and Costa Rica — offer another advantage prized by those on a fixed income: a lower cost of living.

“It’s sometimes assumed that an international retirement vision or lifestyle is something that wealthy people pursue," said Rod Burylo, a Calgary-based financial advisor specializing in international retirement.

"The reality is... some people retire to Mexico because it's so darn cheap," he said.

"One could reason, therefore, that if the economy suffered and their finances suffered, they may be more inclined to retire to Mexico because... they could have a better quality of life than they could have here."

Many Canadians are having to make tough financial choices — including prolonging their careers or downsizing their homes — in preparing for retirement as debt-ridden governments and companies scale back benefits.

While financial considerations alone are rarely enough to prompt a drastic change of scenery, they often play an important role in the decision-making process, according to a recent survey by the BMO Retirement Institute.

The survey by one of Canada's largest banks found more than 70 per cent of Canadians aged 45 or older have given thought to where they want to live out their golden years.

But it also found that while many fantasize about retreating to faraway lands, just over 10 per cent of respondents said they were willing to follow through and leave Canadian soil.

"I think you get people moving abroad for two reasons," said Brian Burlacoff, a financial advisor with Sun Life Financial.

"You get a proportion of people who do want to spend time very purposely outside of Canada — snowbirds, for example, in Florida or Arizona — (and) they have a plan for that," he said.

"But the other group that you get moving away are people that have no plan and they're kind of drawing at straws because they have to find a place that's less expensive to live in order to carry out their retirement objectives."

That kind of "reactive" move, he said, is similar to trading a downtown Toronto lifestyle for a more affordable one in a neighbouring suburb.

But unlike a simple hop across municipal borders, crossing national boundaries can have serious tax and health care implications, he warned.

And even regions where the average day-to-day costs are low can drain the savings of those without a clear budget plan, he said.

A guidebook published by the Department of Foreign Affairs lays out the potential pitfalls for those looking to retire abroad, from the loss of Canadian citizenship or residency — and the resulting loss of health coverage — to the intricacies of foreign tax systems.

"Many developing countries lack the resources to collect taxes on foreign-source income, so they compensate by imposing high consumption taxes or import duties," the document reads.

"Make sure you take into account all taxes, duties and fees, as well as the withholding taxes you will pay on income originating in Canada."

Burlacoff and Burylo both recommend consulting an advisor who understands the specific challenges involved, and keeping in touch throughout the preparations and after the move.

At 61, Kerry Strayton believes he’s still up to a decade away from retirement, but that hasn’t stopped the Richmond, B.C., resident from getting a head start on his plans to retire abroad.

He's already "actively researching" possible destinations for him and his wife, such as Colombia, Uruguay and Thailand — places with a pleasant climate and a thriving cultural scene, that he says are accessible enough that their son and daughter will be able to visit.

Moving seems like a necessity for the couple, whom Strayton says will have to live off their savings and his wife's "small, very modest" pension given that his employer doesn't offer a pension plan of its own.

He estimates it would cost roughly $1,500 a month in one of his chosen destinations to keep the same standard of living that would cost $2,500 in Richmond.

"To be honest, living in this part of the country in particular, which is very, very expensive, it's hard to see how we would manage to have at least some kind of reasonable lifestyle," he said.

Many unknowns remain: for one thing, the couple hasn't decided whether to make a permanent move or take the more popular snowbird route.

But with several more years of squirrelling away savings ahead, the pair has some time to figure it out.

And in the meantime, Strayton said, they'll be checking out the top contenders to see which one could eventually become their new home.

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Cheapest Places To Retire

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Fill your lungs with fresh, clean air and bask in the warm sunshine of Vilcabamba, Ecuador. Vilcabamba is also known to have plenty of affordable organic food, according to International Living. Here, it's easy to stretch a dollar: The site interviewed one ex-pat couple who live on $600 a month. Monthly bills include $1.25 for gas for cooking and hot water; $1.70 for water and $30 for electricity. Gasoline in Ecuador costs less than $1.50 a gallon. Most home rentals are less than $400 a month. A healthy, stress-free lifestyle goes hand-in-hand with longevity: Many Vilcabamba residents live to be 100 years old, the site reports.

Just 200 miles west of Panama City, lies Santa Fe, Panama, known for its rugged terrain, lush rainforest and hiking trails. International Living interviewed an ex-pat who called the health care "excellent," and was able to take care of a dental problem that would have cost $1,000 in the States for just $180.

Penang, Malaysia is a town that offers a rich historic architecture, lively street culture and sandy beaches, according to International Living. Aside from the scenery and recently opened performing arts center, Penang offers affordable healthcare: An annual check-up goes for just $12.

If you're looking to retire in the cobblestone streets of Granada, Nicaragua, you can expect to find some 1,000 expatriates there with you. Granada is thriving with residents engaged in cultural events, outdoor activities and volunteering, according to International Living. As one ex-pat told the site: "I can get up in the morning, take a yoga class, get a manicure and pedicure, have a massage, meet my friends for happy hour, and do it all for less than $30!"

On the Gulf of Mexico, 100 miles south of Mérida on Mexico's Yucatán Peninsula is Campeche, Mexico. A boardwalk stretches for three miles along the gulf, with paths for runners and cyclers. Living expenses for Campeche are relatively low: A week's worth of fruits and vegetables at the market will set you back less than $10, according to International Living. Although the town is beginning to build itself up a bit, with upcoming shopping malls and a wider highway, most residents can get by living in Campeche's historic neighborhoods without a car.